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Creating an Ethical Company

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"If you think it might not be ethical, it isn't." After a decade of distinctly unethical behavior in segments of the business world, ethics has become a popular buzzword. The reality of the recent recession has sent companies scurrying in search of more back-to-basics thinking. They hear and read of the need to rediscover old-fashioned values--surely redefined by new--fashioned pressures, but encompassing such staples as honor, courage, commitment, and, yes, ethics. It's okay to be ethical again.

Because this swing of the pendulum affects every facet of our lives, its impact upon how business is conducted in the years ahead will be profound. Sure, it is good to behave ethically and fairly in personal dealings, but it's also good business whether or not it's currently fashionable.

There's nothing mysterious or altruistic when a company commits to ethical behavior. Companies that stand behind their products and services, that advertise responsibly, and that conduct day-to-day activities in an aboveboard and legal manner are respected by their customers. They nurture brand loyalty, and enjoy the fruits of repeat business.



We've all had the experience of being given a quote of, say, $500 to make unnecessary repairs on an automobile or appliance, and then receiving another quote to fix the real problem for a fraction of that amount. Guess which repair person we go to in the future.

While a company's reputation for ethical dealings is scrutinized by its customers, it is also judged by another important constituency, potential employees. If a company wants to hire ethical people (and I assume that most do), but has failed to establish itself as an ethical company, the task is difficult. Word gets around. For the most qualified and appealing job candidates whose services are in demand, their choice will be simple. They will choose to work where their own ethical standards are more closely matched to that of their employer.

Companies that have failed to establish a strong sense of corporate ethics will, of course, always find people to hire--but at a premium price. To attract good people, these companies must pay more than companies that are not perceived as being ethical. Their revolving doors usually turn faster than their more ethical competitors.

Create an Ethical Company

The first step of finding and keeping good people is to create a first-class organization in every sense of the word. This involves creating
  • A safe and pleasant work environment

  • A system of compensation and advancement potential that is fair and equitable

  • Challenging work

  • Astute and inspiring management

  • A business reputation that allows employees to believe in what they do and to hold their heads high with family and friends
Like the hiring process itself, though, ethics is too often assumed. Upper levels of management might be staffed with ethical and decent people, but that doesn't mean the company can be assumed to follow suit. In many cases it will. In others, the assumption won't match reality. Robert Noyce, an inventor of the silicon chip, once put it, "I don't believe unethical people get ahead in business. If ethics are poor at the top, that behavior is copied down through the organization."

Can Ethics be taught?

Judging from the number of courses being offered in colleges and universities and by major corporations, the attitude of those spear heading these efforts seem to be that ethics can be taught. If nothing else, such training establishes a set of guidelines. The fewer gray areas the better, where ethics is concerned.

Ethics First: Others argue that adult employees cannot be educated to behave ethically. Either they bring to the workplace a sense of ethics, or they don't. As Paul Towne, corporate director of ethics at Honeywell, once said, the company expects employees to "bring their ethics to work with them." At the same time, Honeywell has always placed emphasis on hiring employees whose ethical standards meet the company's lofty expectations. When hiring is done with that in mind, corporate training on ethical behavior becomes less necessary, except for defining specific company guidelines.

An even better approach combines the two philosophies. Hire ethical people and reinforce their ethical behavior by setting policy and demanding strict adherence to it.

An article in the Harvard Business Review, written by Kenneth Andrews, stated, "No matter how much colleges and business schools expand their investment in moral instruction, most education in business ethics (as in all other aspects of business acumen) will occur in the organizations in which people spend their lives... . Policy is implicit in behavior."

Advertise Your Company's Ethical Standards

Assume that both management and a company's daily operations are ethical. Is that sufficient when seeking to hire and retain the sort of employees needed to carry the company's business into the competitive future? Perhaps not. A company must communicate its commitment to ethics to the shrinking pool of the best educated and most capable candidates if they are to be aware of it.

The lowering of ethical standards in business during the highflying '80s has left a skeptical taste in many mouths: "All business is unethical." Those possessing that attitude might view an ethical company with the same jaded, broad-brush outlook. An upstanding, ethical company runs the risk of losing these people as employees because it didn't bother to communicate to them its ethical commitment. The great showman, P.T. Barnum, once defined public relations as, "Do good, and tell about it."

It is my belief, based on more than 45 years in matching the right people to the right jobs, that not only must ethical behavior be raised to a new level of priority in American companies, but a simultaneous thrust must also be triggered to "tell about it." Before an advertisement announcing a new job opening is ever placed, the prevailing "belief in the business world at large should be that this is an honest, ethical, good place to work. Establish that in the public mind and a larger pool of quality job candidates will seek to fill that job.

Robert Half International's corporate motto is "Ethics First." It doesn't represent lip-service; we believe in it.

At the time our company was first established, there were some individuals whose unethical dealings gave the entire personnel service industry a bad name. Our commitment to ethics, therefore, was decidedly self-serving. Because we gradually became known for our Ethics First approach, our business grew.

At the same time, the people we attracted as employees represented the best available, and continue to do so. Simply put, add a solid reputation for ethical behavior to a competitive salary and benefits package, and bright, talented, and committed people will be attracted.

The advantages of attracting and hiring ethical employees are numerous and obvious. Employee theft is the most definitive example. Employee theft is estimated to cost American businesses $120 billion annually, according to studies by the Journal of Accountancy. This accounts for "hard theft," the taking of tangible materials.

Here are other advantages of hiring ethical employees:
  • Ethical employees don't steal an employer's time or materials.

  • Ethical employees don't reveal trade secrets to competitors.

  • Ethical employees don't use their employer's resources and time to pursue personal and/or other business interests.

  • Ethical employees stay in their jobs longer.

  • Ethical employees don't resign without giving fair notice.

  • For employees, working for an ethical company reaps similar rewards. The ethical company

  • Treats employees fairly

  • Respects employees as people

  • Provides growth opportunities within the company, thus lessening the need for employees to look elsewhere for career advancement

  • Doesn't ask employees to do anything illegal, immoral, or unethical

  • Enables employees to speak with pride to their communities about what they do for a living, and for whom they do it
As with any business entity, the ethical climate is established at the top and trickles down to every level. Unethical management sends a message to its employees that it's okay to function on a lower ethical plane. Management that pressures employees to compromise personal ethics to achieve corporate goals does these individuals a disservice.

Hire Ethical Employees

Will ethical companies always manage to land the best job candidates? In a perfect world, they would, but perfection is, as we all know, impossible to achieve. What is important is that if companies seeking to find, hire, and retain the best employees blend a strong and public commitment to ethics into their hiring process, their chances for success are enhanced.

The positive image of industries and professions also plays an important role in generating a larger pool of quality job applicants. It behooves every company, along with the industry associations to which it belongs, to set higher ethical standards and to communicate this to the public at-large. Again, it not only is good for business, it creates a hiring climate more conducive to attracting better employees to its ranks.

Is there a generation gap where ethics are concerned? Up-and-coming young managers in the '80s, particularly in the financial services industry, were often viewed as lacking in ethical principles. Certain surveys substantiate that perception. A study conducted in the early '80s by the Gallup organization, in conjunction with the Wall Street Journal, indicated that younger Americans were more likely to take unethical paths than were their older counterparts. While only 26 percent of the respondents over the age of 50 admitted to taking home work supplies, 50 percent in their thirties and forties confessed to the practice. The same study indicated that only 18 percent of those over 50 admitted to have called in falsely sick, while 40 percent under 40 admitted to having done so. Among executives, 41 percent under the age of 50 said they'd overstated their income tax deductions, whereas 24 percent of the older group said they had.

While interesting, such surveys have little practical use when it comes to making hiring decisions. In the first place, to choose a candidate for a position based upon age is blatantly illegal. In the second place, this information hampers hiring authorities rather than aids them. Bringing preconceived prejudices to the hiring process arbitrarily limits the field of good candidates, and is unethical.

Ethics, I believe, belongs to no generation, gender, nor ethnic, religious or national origin. It is an individual matter, nurtured certainly by society and prevailing business mores, but hardly predicated by any study, survey, or popular myth. Making a hiring decision based upon such factors is not only unethical, it's also bad business.

Is it possible to accurately judge a potential employee's ethical fiber before the job is offered? To a certain extent, I believe it is, and every effort should be made to do so.

A company's entire reputation can be tainted by the misdeeds of one individual. Although there is no fool-proof way to anticipate any individual's actions at a given point-and under specific pressures-- management has an obligation to do everything possible to hire the caliber of people who are unlikely to act in a way that would impact negatively on the company.

The first and most important step, however, is a commitment to hiring ethical people. It should be as firm a commitment as seeking out people with the requisite background, skills, and experience to do the job. Candidates seeking to fill a position should be made aware at the first contact that the company believes in and operates from a solid ethical foundation, and expects every employee to follow suit. This isn't a statement of moral belief. It should be a statement of conviction that a company committed to doing business ethically is a better, more successful company, and certainly a better place to work.
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